McIntyre Prevails Again – Contacts with the U.S. Are Insufficient to Establish Jurisdiction in Arkansas
In keeping with McIntyre, the Eastern District of Arkansas has ruled that the foreign manufacturer of the pharmaceutical metronidazole is not subject to jurisdiction. In the Woods and Brinker matters the plaintiffs alleged that they were injured by contaminated metronidazole and they made claim under the Arkansas Product Liability Act. The decision is available, click here.
The metronidazole was manufactured in India by Claris Lifesciences Limited (Claris India) pursuant to a supply agreement with Pfizer. Pfizer then sold the drug as its own with a notation on the package that it was made by Claris India in India. Claris Lifesciences, Inc. (Claris USA) is a New Jersey corporation with its principal place of business in New Jersey that is also a wholly-owned subsidiary of Claris India. Claris USA was also named as a defendant but did not participate in the manufacturing or distribution of metronidazole in the U.S.
The court first held that neither Claris defendant was subject to general jurisdiction because neither owned property in Arkansas, paid taxes there, had employees or bank accounts there, sent representatives there, or designed or manufactured the product there. The court found that there was insufficient evidence to establish continuous and systematic contacts with Arkansas.
As to specific jurisdiction, the court analyzed whether each Claris defendant purposefully directed activities to Arkansas that gave rise to plaintiffs’ injuries.
As to Claris USA, citing Davis v. Quality Carries, Inc. out of the District of New Jersey, the court found that Claris USA’s status as Claris India’s agent with the FDA was insufficient to establish jurisdiction. The court found that contact with a federal regulatory agency was not sufficient to show contact directed at Arkansas. The court also discredited the fact that Claris USA had a website accessible in Arkansas as being insufficient under the Eighth Circuit’s Zippo test. Finally, the court found that sending letters regarding the recall of the product and receiving customer complaints were insufficient to establish that Claris USA directed activities to Arkansas sufficient to establish personal jurisdiction.
When analyzing whether or not the court had personal jurisdiction over Claris India, the court relied on the Supreme Court’s McIntyre decision and again rejected all arguments regarding contact with the U.S. and the FDA in general as they were not Arkansas specific. The court found that placing a product in the stream of commerce in the United States did not show a target to a specific region such as Arkansas. The only contact between Claris India and Arkansas was that some of the products Claris India made were distributed by Pfizer in Arkansas, and that was insufficient to establish personal jurisdiction.
The ruling has great implications for foreign manufacturers in that they may be able to insulate themselves from jurisdiction in the United States by establishing U.S. subsidiaries to act as their regulatory agents while distributing the product through an unrelated third-party. By directing their activities to the U.S. as a whole and not to specific target states, the foreign manufacturers can build a wall of protection against claims arising out of their products.